The Islamic Corporation for the Development of the Private Sector ( ICD ), a private sector arm of the Islamic Development Bank Group, is opening two new Islamic banks in Mali and Benin in 2013, to provide Islamic financial services in the areas currently greatly underserved, Khaled Al-Aboodi, chief executive officer and general manager of ICD , announced this week.

Al-Aboodi, who was speaking at the Islamic Banking Summit, also stated that it is planning to issue a $ 200 million sukuk for the government of Senegal to provide liquid Islamic products for Islamic banks.

"We see sukuk as the "jewel in the crown" of Islamic finance and we are currently working on the structuring issues for several African countries. This is a development we see as providing a tremendous boost for African Islamic infrastructure finance," he said.

More than 50 percent of the population in Africa is Muslim. "The issue for Islamic banking in Africa is not on the demand side which is potentially massive, but rather it is a supply side issue," explained Al-Aboodi. "The uniqueness of Islamic banking principles makes this a perfect alternative to the traditional and conventional banking system that leaves a larger part of Africans unsatisfied. Islamic interest free modes of financing should be seen as a parallel mode of finance which can coexist with interest-based conventional financing to ensure the African population has a competitive market place with Islamic financing finding its place."

ICD has long had an ambitious series of projects, applying Islamic finance principles, to African infrastructure needs.

"Africa critically needs more infrastructure investment, roads, housing, schools and hospitals for achieving its development goals, and a variety of initiatives have been put in place," said Al-Aboodi."

Some 10 African countries received financing approvals from the ICD between 2010-2012, with the largest beneficiaries being Mauritania, Sudan, Gabon, Gambia and Mali.

"African nations face huge challenges," said Al-Aboodi. "The large vacuum in financial sector services in Africa have not been filled by the conventional banking in recent years and that is why Islamic finance can create a competitive edge for all financial institutions to explore these untapped markets.

"To that end the ICD stands ready to cooperate and extend its available expertise and resources to all potential partners and viable projects to pay its tribute to the development of this great region," he added. source: Arab News